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ARIZONA HOUSE OF REPRESENTATIVESFifty-fourth Legislature Second Regular Session |
Senate:
FIN DPA 8-0-2-0 | 3rd Read 27-2-1-0
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SB 1293: DOI; DFI; omnibus
Sponsor: Senator Livingston, LD 22
Transmitted to the Governor
Overview
Makes numerous changes to statute relating to the newly created Department of Insurance and Financial Institutions (DIFI).
History
The Arizona Constitution stipulates that domestic and foreign insurers are subject to licensing, control and supervision by a department of insurance. The director is appointed by the Governor with the consent of the Senate as prescribed in statute (AZ Const. Art. 15, § 5). As outlined in statute, the director of the department of insurance has the powers and authority reasonably implied or expressly conferred within the statutes relating to insurance (A.R.S. § 20-142).
The Department of Financial Institutions has charge of the execution of the laws of this state relating to financial institutions and enterprises (A.R.S. § 6-110). This department is responsible for the licensing, supervision and regulation of state-chartered financial institutions and enterprises to maintain the safety and soundness of the financial industry in Arizona. The Department of Financial Institutions also investigates complaints that are filed by consumers against licensed entities and directs appropriate remedial action if the violations are substantiated (www.dfi.az.gov).
The Arizona Automobile Theft Authority (AATA) is a state agency whose purpose is to deter vehicle theft. The AATA is funded solely by the Insurance Industry who pays AATA $1/year for every vehicle insured in Arizona. The AATA works with law enforcement and prosecution to provide grants for equipment, people and compensation for casework regarding vehicle theft. The AATA also works closely with insurance companies regarding trends of vehicle theft and the public to educate them about vehicle theft and the steps that need to be taken in order to deter it from their neighborhoods (www.aata.az.gov).
Laws 2019, Chapter 252 absorbed the AATA into the consolidation of the Arizona Department of Insurance and the Department of Financial Institutions into the Department of Insurance and Financial Institutions.
Provisions
Department of Insurance and Financial Institutions
1. Establishes the Department of Insurance and Financial Institutions to be known as DIFI. (Sec. 16)
2. Instructs the director of DIFI (Director) to appoint:
a) A deputy director of the financial institutions division of DIFI;
b) An assistant director to perform the duties of the deputy director of the financial institutions division; and
c) A deputy director of the insurance division of DIFI. (Sec. 2, 3, 17)
3. Stipulates that the deputy directors of the financial institutions division and insurance division serve at the pleasure of the Director and report directly to the Director. (Sec. 2, 17)
4. Specifies that the Director must have business experience and be well versed in financial institution matters, in addition to other prescribed requirements. (Sec. 20)
Claims and Investigations
5. Requires DIFI to prepare detailed billing statements that provide reasonable specificity of the expenses and time billed in connection with an examination of an adjuster, producer or broker and that cite the rule or statute that authorizes the fees. (Sec. 21)
6. Directs the party being examined to pay the costs allowed by this Act if the adjuster, producer or broker is found to have violated statute. (Sec. 21)
7. Specifies that, beginning January 1, 2021, a person being examined is only responsible for the direct costs of an examination that are supported by a billing statement that complies with statute. (Sec. 21)
8. Instructs the Director to provide an insurer with a copy of any document related to insurer claims that the Director receives and believes supports a violation of statute or that justifies any regulatory or other action against the insurer. (Sec. 24)
9. Maintains that a disclosure of such documents is not a waiver of any applicable privilege or claim of confidentiality in the disclosed document. (Sec. 24)
10. Requires the Director to provide copies to an insurer being examined of all documents and other information that the Director intends to rely on as evidence of an alleged violation of statute or justifies an action against the insurer to allow them to review the findings and make any objections. (Sec. 25)
11. Stipulates that such a disclosure is not a waiver of any applicable privilege or claim of confidentiality in the disclosed documents or other information. (Sec. 25)
12. Requires the Director to provide the captive insurer with a copy of any document they believe supports a violation of statute or that justifies any regulatory or other action against the captive insurer. (Sec. 92)
13. Specifies that such a disclosure is not a waiver of any applicable privilege or claim of confidentiality in the document that was disclosed. (Sec. 92)
14. Requires the Director to provide copies to an insurer of all documents that the Director believes support a violation of statute or that justify any regulatory or other action against the insurer. (Sec. 123)
15. Stipulates that such a disclosure is not a waiver of any applicable privilege or claim of confidentiality in the disclosed documents. (Sec. 123)
16. Maintains that a regulated person who is being inspected or audited is only responsible for the direct and reasonable costs of the inspection or audit and is entitled to receive a detailed billing statement. (Sec. 163)
17. Requires a detailed billing statement to provide reasonable specificity of the inspection or audit fees imposed and cite the rule or statute that authorizes the fees being charged. (Sec. 163)
Assessments, Fees and Monies
18. Removes the current manner in which the fees are adjusted and stipulates that the fees will be determined by the Director. (Sec. 26)
19. Eliminates the requirement for the Director to annually revise the assessment amount. (Sec. 53)
20. Specifies that monies appropriated to DIFI for the fraud unit must be included as a separate line item in the general appropriations act and used exclusively to operate the fraud unit. (Sec. 53)
21. Allows an administrator to collect charges according to the written agreement between the administrator and insurer. (Sec. 57)
22. Provides that the written agreement must outline the applicable standards for the permissible collection of charges by the administrator. (Sec. 57)
23. Prohibits an administrator from collecting charges that remain unpaid on an account that has been inactive for more than 12 months, unless the administrator is licensed as a collection agency. (Sec. 57)
24. Exempts a person licensed to act as an administrator for an insurer and that collects charges pursuant to statute from collection agency requirements outlined in statute. (Sec. 144)
25. States that monies appropriated from the Automobile Theft Authority Fund included in the General Appropriations Act must include separate line items for at least the following:
a) Automobile Theft Authority operating lump sum appropriation;
b) Arizona vehicle theft task force; and
c) Local grants. (Sec. 166)
Miscellaneous
26. Asserts that the guidelines for insurers on home health services used by the Director must include all statutorily prescribed requirements. (Sec. 21)
27. Repeals the insurance advisory board established in statute. (Sec. 44)
28. Instructs the Director to appoint a person to operate the fraud unit in DIFI in conjunction with the operation of the Automobile Theft Authority established in statute. (Sec. 53, 166)
29. Stipulates that any withdrawals made from the contingency reserve must be approved by the insurance director or commissioner of the insurer's state of domicile. (Sec. 94)
30. Increases the time period that the Director must approve or disapprove the form or rate for any long-term care insurance policy or rate from 30 days to 60 days. (Sec. 102)
31. Repeals the uniform employee health status questionnaire committee established in statute and states that DIFI will prescribe the uniform employee health status questionnaire. (Sec. 111)
32. Repeals the continuing education review committee established in statute. (Sec. 121)
33. Removes effective date requirements relating to insurance for a transportation network company that requires a driver to accept rides. (Sec. 137)
34. Requires DIFI to adopt rules to establish fees relating to direct and indirect costs in connection with examinations. (Sec. 178)
35. Exempts DIFI from rulemaking requirements for one year after the effective date of this Act. (Sec. 178)
36. Directs the Legislative Council staff to prepare legislation conforming statute to this Act for consideration in the Fifty-Fifth Legislature, First Regular Session. (Sec. 179)
37. Repeals the definition of credit property insurance. (Sec. 95)
38. Defines charges, deputy director and superintendent. (Sec. 1, 56)
39. Makes numerous technical and conforming changes. (Sec. 1, 3-16, 18-43, 45-110, 112-120, 122, 124-143, 145-177)
40.
Contains a retroactivity clause of July
1, 2020. (Sec. 180)
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44. SB 1293
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